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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> McGraddie v McGraddie & Anor [2012] ScotCS CSIH_23 (13 March 2012) URL: http://www.bailii.org/scot/cases/ScotCS/2012/2012CSIH23.html Cite as: [2012] CSIH 23, [2012] ScotCS CSIH_23

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EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

Lady Paton

Lord Bonomy

Lord Malcolm

[2012] CSIH 23

A556/07

OPINION OF THE COURT

delivered by LADY PATON

in the cause

DAVID McGRADDIE

Pursuer and Respondent;

against

ROGER JOHN McGRADDIE and LORNA ESTHER GREEN

Defenders and Reclaimers:

_______

Pursuer and respondent: J Brown; McClure Naismith LLP

First defender and reclaimer: E W Robertson; Balfour & Manson

Second defender and reclaimer: S P J Buchanan; HBM Sayers

13 March 2012

Introduction

[1] The pursuer, now in his seventies, lived and worked in America for about 25 years. He then decided to return to Glasgow. He asked his son, a property developer, (the first defender) to find a house for him. The first defender identified a flat at 23 St Helens Gardens as suitable. On 18 November 2005 the pursuer and his wife flew to Scotland. They initially lived with the first defender and his partner, a self-employed accountant, (the second defender) at the defenders' home at 42 Burnhead Road, Glasgow. They viewed the flat at St Helens Gardens, and approved it. On 8 December 2005 the pursuer provided the necessary funds for the purchase by placing £192,703.88 in the first defender's bank account. However on 14 December 2005 the title to the flat was taken in the name of the first defender, and not in the name of the pursuer or the pursuer and his wife. How that came about is one of the disputed issues in this case.

[2] On 1 January 2006, the pursuer and his wife moved into St Helens Gardens. Six days later, on 6 January 2006, the pursuer's wife died of a long-standing heart condition. Thereafter the pursuer continued to live on his own at St Helens Gardens. He regularly visited the defenders at their home, which was nearby.

[3] About a year later, on Monday 19 February 2007, the pursuer gave the first defender a cheque made out in his favour for £285,000. The reason for the handing-over of the cheque is in dispute, all as set out below. The first defender deposited the cheque in a bank account. The defenders used about £200,000 from the account (together with £90,000 raised by a mortgage) to purchase a newly-built house at 6 Lochrig Court, Stewarton, taking the title in their joint names. They began to occupy the house in May 2007, although also retaining their home at Burnhead Road for a period before selling it. They used the balance of the £285,000 inter alia to pay off credit cards, buy two cars, put finishing touches to 6 Lochrig Court, and decorate their existing home at Burnhead Road in preparation for its sale.

[4] The pursuer then raised the present action, seeking inter alia to have the titles to the properties at St Helens Gardens and Lochrig Court transferred into his name. The action was defended. During a proof before answer, the court was faced with two diametrically opposed accounts of events, outlined in the Opinion of the Lord Ordinary and recorded verbatim in the transcript of the evidence contained in an Appendix.

The pursuer's account

[5] According to the pursuer, he trusted his son. He provided the funds, and relied upon his son to identify a suitable property and to carry through the legal formalities. When living in the USA, the pursuer had bought heritable property and had taken title in the name of himself and his wife. He had expected the title to St Helens Gardens similarly to be taken in their joint names. The first defender had raised the possibility that the title might be taken in the name of his 17-year-old son Richard (the pursuer's grandson), but the pursuer and his wife thought that inadvisable, partly because Richard had Asperger's syndrome. There had been no discussion about the title being taken in the first defender's name.

[6] In relation to 6 Lochrig Court, the pursuer explained that, after a year of mourning, he wanted to move out of St Helens Gardens as it had too many memories. Also he wanted a house rather than a flat. He asked the first defender to find another property. A housing development at Stewarton, Ayrshire, was identified. The first defender negotiated a builders' discount of about ten per cent, but the pursuer gave evidence that he managed to reduce the price further by visiting Stewarton personally and negotiating a further £10,000 discount. The pursuer then gave the first defender a cheque for £285,000. The pursuer denied any suggestion that the money might be a gift, or intended as inheritance tax planning, or that he did not want the authorities to know that he had any interest in a property. He said that he had expected the title to be taken in his name.

[7] When the pursuer subsequently discovered that the titles to both houses, purchased with his money, were not in his name, he raised the present action.

The defenders' account

[8] According to the defenders, the first defender's mother (the pursuer's wife) wanted the title to St Helens Gardens to be taken in the name of her grandson, the defenders' 17-year-old son Richard, although she and the pursuer were to occupy the property. The property was in fact reserved in Richard's name, and missives were concluded in his name. However both the lawyer and the pursuer thought that Richard was too young to own such a property. An additional concern was that there might be risks for the pursuer and his wife, as Richard would be free to sell, mortgage, or lease the property; also Richard's possible bankruptcy or death had to be taken into account.

[9] Ultimately the title was taken in the first defender's name. The first defender (aged 53 at the proof) gave several explanations for that development. At various stages in his evidence, he stated that his mother's wishes were to be respected, and that the flat would in any event ultimately go to Richard; that the pursuer had not wanted the property to be taken in his name ("Well, he's left [America], hasn't paid his bills and he was terrified that they would trace him here through his bank; so, if nothing was in his name, they could get nothing from him": Appendix pages 146F to 147B); that if title were to be taken in the pursuer's name, the pursuer would have to visit the lawyer in order to go through various formalities relating to inter alia identification and money-laundering: but the pursuer had not wished to be troubled by any of the practical or legal aspects of the purchase. The first defender also stated that he had just left matters in the hands of the professionals, possibly implying that the lawyer had simply proceeded to take the title in the first defender's name. It was put to the first defender in the course of cross-examination that there had been no discussion about St Helens Gardens being a gift. His response was: "I can't comment. It's something that wasn't discussed" (Appendix page 264D).

[10] The second defender for her part stated in evidence that the pursuer's wife had become too ill to discuss matters. However the pursuer himself had specifically instructed that the title to St Helens Gardens should be taken in the first defender's name. The second defender had accordingly instructed the lawyer in those terms. At one stage in her evidence, the second defender said that she regarded this as a "gift to Richard". She also said that the pursuer "didn't want anything to be in his name".

[11] As for 6 Lochrig Court, the defenders' evidence was that the pursuer visited them in their home at Burnhead Road on Monday 19 February 2007. He gave the first defender a cheque in his favour for £285,000, saying something along the lines of "Do what you want with it". The defenders understood the cheque to be a gift, possibly motivated by the pursuer's desire to minimise inheritance tax. The nil rate limit for inheritance tax relief during the year 6 April 2006 - 5 April 2007 was £285,000, which was of some significance. Admittedly the nil rate for inheritance tax relief for the year in which the pursuer's wife died (6 April 2005 – 5 April 2006) was £275,000; also there was no limit on the amount of an inter vivos gift, subject to a 7-year tapering relief: but lay people could become confused about those matters. In any event, according to the second defender, the pursuer had been carrying about a piece of paper on which was written, as she put it in her evidence, "the amount of 285, with that being the ceiling for inheritance tax" (Appendix page 366D-E). Thus there was support for their evidence that the cheque had been a gift given with inheritance tax in mind. The defenders were surprised and grateful for the gift. They thanked the pursuer. On Tuesday 20 February 2007 the first defender paid the cheque into a bank account. The second defender then saw an advert for a new housing development in Stewarton. On Saturday 24 February 2007 they visited Stewarton and reserved a house. In order to qualify for a discount and special offers, the date of entry had to be 31 March 2007. The sum required for settlement was £290,768.89. The defenders used about £200,000 of the gift from the pursuer (transferred into a client account in joint names of the defenders at the solicitor's office), and £90,000 from a joint mortgage raised on the property. The gift was about £5,768 short of the sum required for settlement. Title was taken in the defenders' joint names. The defenders used the free balance of the gift to buy cars, decorate and furnish 6 Lochrig Court, decorate 42 Burnhead Road for selling purposes, and pay off credit card debts. In May 2007 the defenders began to occupy 6 Lochrig Court. The pursuer was aware that they had done so. He himself had never seen or visited the house.

[12] Subsequently the pursuer changed his mind (according to the defenders, following a disagreement between the pursuer and the first defender at about the end of July 2007, possibly concerning the pursuer's relationship with another woman). The pursuer consulted lawyers in July 2007, stating that he wanted both properties to be in his name, and raised the present action. The defenders gave evidence that the first intimation of his change of mind had been the service of the summons on them at Burnhead Road, on their return from a holiday abroad in August 2007.

Payments of £3,000

[13] One unusual feature of this case was the payment of sums of £3,000 by the defenders to the pursuer during the months following the handing-over of the cheque for £285,000. According to the defenders, they made seven payments of £3,000 to the pursuer, mainly in cash, following upon receipt of the cheque on 19 February 2007. The first such payment was on 27 February 2007 (Appendix page 386B). In evidence they described withdrawing cash from the bank or gathering cash by using cash-line machines (ten trips at £300 per trip). The first defender described the payments as being made "every month". The second defender explained that she mentioned these cash payments to her lawyer, who advised her to make the payments traceable, for example, by transferring money directly from the first defender's bank account to the pursuer's bank. The second defender arranged three such bank transfers. But according to her evidence, the pursuer "went ballistic. He shouted and said that he didn't ask for it to be put into his bank; he asked for it in cash. He didn't want it that way. He wanted it in cash …" (Appendix page 384D-E; the first defender's evidence was to the same effect: page 197C). The defenders' son Richard characterised the payments as "monthly", and described seeing the pursuer (his grandfather) receiving a brown envelope containing cash and sitting counting it (the pursuer being, in Richard's words "not a very trusting person": Appendix page 628C-D). The pursuer for his part denied expressing any disquiet about receiving money directly into his bank account rather than in cash. He said that he received only three payments of £3,000 (coincidentally the same number as the direct bank transfers described by the second defender), each of which was paid into his bank account. The pursuer's evidence, and the cross-examination of Richard McGraddie conducted on behalf of the pursuer, made it clear that the pursuer's position was that he had never received any cash payments of £3,000 from the defenders (Appendix pages 89 et seq, and pages 645E to 646A).

[14] The Lord Ordinary did not ultimately reach any conclusions about the number of payments, the reasons underlying those payments, or whether cash was indeed gathered in the way the defenders described and then given to the pursuer in a brown envelope. We refer to this matter again in paragraph [49] below.

Attempted amendment during the proof

[15] The proof before answer began on Tuesday 28 April 2009. The pursuer's case closed that afternoon. Defence evidence began, and was continuing on Friday 1 May 2009. A further diet was fixed commencing on Wednesday 20 May 2009. In the course of that diet, counsel for the defenders moved the court to allow the pleadings to be amended in terms of a Minute of Amendment, the focus of which was first, that the first defender had Asperger's syndrome which might have affected the way in which he gave his evidence (paragraph [19] of the Lord Ordinary's Opinion); and secondly, that the pursuer had debts in America. The Lord Ordinary heard submissions, and refused to allow amendment at that late stage.

The Lord Ordinary's assessment of the evidence
[16] In his Opinion in paragraphs [18] to [23], the Lord Ordinary recorded his views about the witnesses. He assessed all the evidence, and ultimately concluded in paragraph [32] that:

" … Critically, there is the matter of whose evidence I find more likely to be credible and reliable. For the reasons given above I prefer the pursuer over both the first and the second defender. I do not find any of the other evidence materially to undermine the specifics of the pursuer's account or his evidence more generally. I accordingly find that the defenders have failed to prove that the pursuer made a gift to them of the sum of £285,000. Rather, I find it more probable that the cheque in that sum was handed over by the pursuer to the first defender for, as the pursuer avers, the purpose of purchasing the house which became known as 6 Lochrig Court, Stewarton, with a view to the pursuer occupying that property. Thus, even if I am wrong on where the initial onus of proof lay or on the effect of the legal presumptions relating to gift, it would be my view that the pursuer is entitled to succeed on the basis that the relevant averments made by him have been shown probably to be correct."

[17] On 7 May 2010, the Lord Ordinary granted decree in favour of the pursuer, ordaining the first defender to deliver a disposition in favour of the pursuer of St Helens Gardens within 28 days, and to deliver a disposition in favour of the pursuer of 6 Lochrig Court within 28 days in return for payment by the pursuer to the defenders of £5,738.39. In the event that a disposition relating to 6 Lochrig Court was not so delivered, the Lord Ordinary indicated that it was his intention to grant decree against the defenders, jointly and severally, for payment to the pursuer of £285,000 in terms of the Seventh Conclusion of the Summons (paragraph 10 of the Lord Ordinary's second Opinion dated 7 May 2010).

[18] The defenders reclaimed. Although they had been jointly represented in the proof before answer, they were separately represented in the reclaiming motion.

Submissions for the second defender

[19] The first speech was given by counsel for the second defender, as he had conducted the joint defence at the proof.

[20] Ground of Appeal 1 related to St Helens Gardens. For the reasons given by counsel for the first defender (noted in paragraph [25] below), it was not necessary to argue the first ground. The reclaiming motion should be allowed in relation to St Helens Gardens as paragraph (i) of the Lord Ordinary's interlocutor of 7 May 2010 was no longer necessary.

[21] Ground of Appeal 2 related to Lochrig Court. Counsel submitted that the Lord Ordinary had failed to take proper advantage of seeing and hearing the witnesses, and had "gone plainly wrong". It was accepted that the test to be satisfied was a high one: Hamilton v Allied Domecq plc 2006 SC 221, at paragraphs [83] to [85]. But critical averments in the pursuer's pleadings (at pages 17D-E, 18A, 21D, 22A-B, and 26B) had not been established in evidence. The Lord Ordinary could not conclude, at paragraph [32], that "the relevant averments made by [the pursuer] have been shown probably to be correct". In support of those propositions, counsel referred to certain passages in the evidence. The pursuer had given an inherently contradictory and remarkably implausible account. The Lord Ordinary appeared to have disregarded all the contradictions in the pursuer's evidence, or at least to have failed to explain how they could be resolved (although he had been critical of any discrepancies in the defenders' evidence). Contrary to the Lord Ordinary's view, there had indeed been "evidence materially to undermine the specifics of the pursuer's account [and] his evidence more generally". There was no support in the surrounding facts for the pursuer's version of events, whereas there was material to support the defenders' position. It was not open to the Lord Ordinary to find the pursuer's account more probable. In the result therefore the Lord Ordinary should not have accepted the pursuer's account, and the decree so far as relating to Lochrig Court should be recalled.

[22] Ground of Appeal 3: The property at Lochrig Court had been bought by the first and second defenders, not by the first defender alone. There was no justification for granting a decree of specific implement ordering the first defender to dispone both his and the second defender's shares. The most which could be demanded of the second defender was repetition of money.

[23] Ground of Appeal 4: The Lord Ordinary erred in deciding that he would grant decree for £285,000 against the defenders jointly and severally in the event that a disposition relating to Lochrig Court were not delivered. Even if the first defender had been (on the pursuer's account) unjustifiably enriched, the second defender had not. Counsel referred to Evan-Jones, Unjustified Enrichment, paragraphs 7.01-7.10; 7.19-7.20; and 7.33; Shilliday v Smith 1998 SC 725, at pages 727 to 728C; Dollar Land (Cumbernauld) Ltd v CIN Properties Ltd 1998 SC (HL) 90, Lord Hope at pages 94 and 99. The second defender had not been enriched by the pursuer, but by the first defender. There was no evidence that the second defender had been in bad faith. While she was present at the time when the cheque was handed over, there was no evidence that she knew anything about the pursuer's alleged instructions to purchase property for him. Accordingly the pursuer could not seek repetition of such monies from the second defender on the basis of unjustified enrichment. The pursuer's remedy was against the first defender as his agent: thus the pursuer could not resort to an equitable remedy against the second defender: cf Varney (Scotland) Ltd v Lanark Town Council 1974 SC 245 at pages 252 to 253.

[24] Ground of Appeal 5: The Lord Ordinary had erred in the exercise of his discretion by refusing to allow amendment on the fifth day of the proof. The first defender had given his evidence in a remarkable fashion. The fact that he had been diagnosed as having Asperger's syndrome might explain why. The Lord Ordinary's exercise of his discretion was flawed in that he had not taken into account the prejudice which would be suffered by the defenders because of the court's lack of knowledge about Asperger's syndrome, and how that syndrome might affect the first defender when giving evidence: cf McGhee v Diageo plc 2007 SLT 1016. The court ought to have given greater weight to the diagnosis and its significance. The proposed amendment was late because it was only in the course of the first defender's evidence that his legal advisers appreciated that he might have Asperger's (a syndrome suffered by his son, Richard). It was accepted that if the Lord Ordinary had allowed the amendment, the pursuer should be allowed an opportunity to have the first defender examined by his own professional expert. In conclusion, the appeal court should allow the amendment and remit back to the Lord Ordinary to hear evidence on the basis of the averments in the Minute of Amendment.

Submissions for the first defender

[25] Ground of Appeal 1: Counsel advised the court that the first defender was prepared, without any concession of wrongdoing on his part, to dispone the flat at St Helens Gardens to the pursuer. It was not therefore necessary to argue the first ground.

[26] Counsel adopted the submissions made on behalf of the second defender in respect of Grounds of Appeal 2 and 5. He made the following further submissions.

[27] Ground of Appeal 2: The Lord Ordinary had "gone plainly wrong" in his assessment of the evidence, and in his conclusion at paragraph [32] that "the pursuer is entitled to succeed on the basis that the relevant averments made by him have been shown probably to be correct". It was accepted that the test to be met was a high one: Clarke v Edinburgh & District Tramways Company Limited 1919 SC (HL) 35, Lord Shaw of Dunfermline at pages 36 to 37; Thomas v Thomas 1947 SC (HL) 45, Lord Thankerton at page 54. But in the present case, the Lord Ordinary had not obtained assistance from all the facts and circumstances (other than the parties' competing accounts). An objective analysis of the evidence demonstrated that the Lord Ordinary was wrong in his reasoning and his conclusion. The following matters were of particular relevance.

(i) Insufficient account had been taken of the evidence of the pursuer's estrangement from his son Daniel, and the contrasting good relationship with the first defender and his son Richard, involving visits to America and regular telephone-calls.

(ii) The pursuer's account of events was so lacking in specifics and candour, so tight-lipped and awkward, and so lacking in internal consistency or accuracy, that an objective assessment of that account would have led to the conclusion that the pursuer could not be relied upon.

(iii) One issue in the case was inheritance tax and how that tax made sense of a gift of £285,000. The pursuer denied that any question of tax had been involved. But there had been evidence from professional witnesses Mr Mackie, solicitor, and Mr Wilson, tax accountant, which cast doubt on that denial. For example, it was significant that Mr Wilson spoke of a meeting with the pursuer, yet the pursuer denied any such meeting. The Lord Ordinary had not taken proper account of that evidence. While the Lord Ordinary mentioned inheritance tax in his opinion, he had not addressed or resolved the points raised by the tax issue.

(iv) The Lord Ordinary had failed to have proper regard to the circumstances surrounding the reservation of 6 Lochrig Court. He had placed weight upon evidence (obtained in cross-examination) apparently suggesting that the defenders had identified the property before the handover of the cheque on Monday 19 February 2007. But only in an advert on Tuesday 20 February 2007 was a price of £299,995 mentioned (which was consistent with the defenders' account of events): prior to that date, the price advertised had been higher (£310,000). Thus the surrounding circumstances supported the defenders' account.

(v) The evidence relating to the delivery of the cheque had not been properly assessed. In his evidence, the pursuer gave no details of the transaction (for example the defenders' reactions and remarks), whereas the defenders explained in their evidence how surprised they had been, and how they had thanked the pursuer. The evidence of the defenders' son Richard about the couple's surprise and delight following upon receipt of the cheque tended to support the defenders' version of events.

(vi) The Lord Ordinary failed to take into account the reasons underlying the gift of £285,000, namely (i) a longstanding antipathy to his other son Daniel and his determination that Daniel should not receive anything; and (ii) general inheritance tax planning. Thus although the Lord Ordinary concluded, at paragraph [18] of his Opinion, that there was "nothing to suggest that the pursuer would be particularly generous", there was a rationale behind the gift.

(vii) The Lord Ordinary had given insufficient weight to the fact that the price of 6 Lochrig Court was not £285,000. In his pleadings, the pursuer averred that he had provided the full cost of the property: but £285,000 was not in fact the price of the property.

(viii) The Lord Ordinary had also failed to take into account the use to which the defenders had put the £285,000. They had used part to acquire 6 Lochrig Court, but they had also bought cars, paid off debts, and decorated their existing home. Their conduct was consistent with their version of events, namely that the money was given not exclusively for the acquisition of any property, but for the first defender to use as he thought fit.

(ix) While the Lord Ordinary was critical of the defenders when their evidence did not match their averments on record, he tended to be less critical of the pursuer. For example, the pursuer averred (at page 17D-E) that he "instructed the first defender to purchase [Lochrig Court] on his behalf". Yet in his evidence he did not say that, although given many opportunities to do so. The Lord Ordinary gave no specific reason why he found the pursuer credible.

(x) The Lord Ordinary erred in relying upon the circumstances surrounding the first property transaction when assessing the credibility and reliability of the defenders in relation to the second property transaction. The evidence relating to St Helens Gardens established that the conveyancing solicitor advised against putting the title in the name of teenage Richard, and also that he required to be satisfied about the identity of the person taking the title, as inter alia a precaution against money-laundering. As the pursuer had not co-operated in the first property transaction, the title was perforce taken in the first defender's name. Thus the Lord Ordinary was wrong to rely upon the circumstances of the first property transaction when making an assessment of the second property transaction.

All of the above matters demonstrated that the Lord Ordinary had gone wrong in his assessment of the evidence. The reclaiming motion should accordingly be allowed.

[28] Ground of Appeal 5: The way in which the first defender gave his evidence during the proof alerted his advisers to the need for a professional medical opinion. The Lord Ordinary required guidance on the nature and effect of Asperger's syndrome. Without that guidance, he could only speculate. The Lord Ordinary had failed to consider the prejudice which the first defender would suffer if the amendment was not allowed, and had thus left a relevant consideration out of account. Although the test to be met in respect of the wrongful exercise of discretion in refusing an amendment was a high one (McGhee v Diageo 2007 SLT 1016), that test had been satisfied. Thus the Lord Ordinary had erred in the exercise of his discretion by refusing to allow the Minute of Amendment.

[29] In conclusion, counsel invited the court to allow the reclaiming motion: the interlocutor of 7 May 2010 was unnecessary insofar as it related to St Helens Gardens; the interlocutor should be recalled insofar as it related to Lochrig Court.

Submissions for the pursuer

[30] Ground of Appeal 2: Counsel submitted that while the Lord Ordinary would have been entitled to prefer the defenders' version of events, he was not obliged to do so. The factors relied upon by the defenders were not of such materiality or weight that the Lord Ordinary was precluded from believing the pursuer. There was a presumption against donation, which the defenders had not succeeded in overcoming. The Lord Ordinary had taken full advantage of seeing and hearing the witnesses, and had given careful reasons for preferring the pursuer's evidence. Reference was made to Piglowska v Piglowski [1999] 1 WLR 1360. Counsel referred to two aspects of the evidence, namely the price of Lochrig Court and the significance of inheritance tax. In relation to the price, while the figures could be shown to be consistent with the defenders' account of events, the defenders had failed to demonstrate such compelling discrepancies in the pursuer's account as to drive the Lord Ordinary to accept the defenders' account. Similarly while there was some evidence about financial advice (for example, a meeting between the pursuer and an accountant) there was no evidence compelling the Lord Ordinary to the conclusion that a gift of £285,000 had been made for the purposes of inheritance tax. Accordingly the Lord Ordinary was entitled to adopt the approach he had.

[31] Ground of Appeal 3: The decree against the first defender in relation to Lochrig Court recognised the difficulty that the title was in the joint names of the first and second defenders. The second defender could not be obliged to convey her half share to the pursuer. Accordingly if the first defender failed to achieve her co-operation, the alternative interlocutor came into play, and the second defender would be obliged to pay money.

[32] Ground of Appeal 4: While the pursuer had a remedy against the first defender, a decree obtained against him might be worthless. It could not be said that the pursuer should be kept out of his money while the second defender remained in 6 Lochrig Court. The facts accepted by the Lord Ordinary constituted a classic case of unjustified enrichment. Three questions had to be answered: (i) was there enrichment, (ii) at the expense of the pursuer, and (iii) were there circumstances justifying the second defender's retaining that enrichment: cf Shilliday v Smith 1998 SC 725, pages 727 and 731. The first two questions should be answered in the affirmative, and the third question in the negative. Even if the second defender had not known of the background to the cheque, she was not in law entitled to keep the enrichment. In any event, on the evidence, the court was entitled to conclude that the second defender had been complicit at every stage.

[33] Ground of Appeal 5: The reasons for opposing the amendment were numerous. First, the defenders in effect sought to lead expert evidence to bolster the credibility of the first defender: that was a complex and contested area of law. Secondly, if the defenders were to lead such expert evidence about the first defender's alleged condition, the pursuer would have wished to instruct his own expert on that matter, with the inevitable consequence that the diet of proof would have to be discharged. Also the first defender had already been cross-examined on the basis that he did not have Asperger's syndrome. Thirdly, the Lord Ordinary had been concerned about expense. In the circumstances the Lord Ordinary had reached the correct conclusion. McGhee v Diageo cit sup could be distinguished. In any event, the procedural route suggested by the defenders was unprecedented (namely an amendment; a hearing of the evidence of the defenders' expert and any competing expert; a re-opening of the findings made by the Lord Ordinary; and a fresh reclaiming motion). Only very compelling reasons could justify such a route.

Discussion

Ground of Appeal 1

[34] The first defender has indicated that he is willing to dispone the property at St Helens Gardens to the pursuer. We shall therefore continue the reclaiming motion to a By Order hearing to be fixed on a date at least 28 days after the date of this opinion. If we are advised that the pursuer has been given title to St Helens Gardens, we are minded to allow part of the reclaiming motion by recalling the relevant part of the Lord Ordinary's interlocutor of 7 May 2010 as being unnecessary.

Ground of Appeal 2

[35] As Lord Hamilton stated in Hamilton v Allied Domecq plc 2006 SC 221 at pages 242 to 243:

"[83] In the context of the role of an appellate court in relation to issues of fact, counsel referred Thomas v Thomas, Caledonia North Sea Ltd v London Bridge Engineering Ltd, Thomson v Kvaerner Govan Ltd and Simmons v British Steel plc. An appeal court should bear in mind not only the advantage which the first instance judge has, on questions of credibility and of findings of primary fact, in seeing the parties and other witnesses; that advantage applied equally to the judge's evaluation of those facts (Piglowska v Piglowski, per Lord Hoffmann, p 1372). Accordingly, this court required to use extreme caution in its reading and analysis of Mr Hamilton's [a witness's] evidence. The assessment of it, in its context, was pre-eminently a matter for the Lord Ordinary. …This Court was entitled to interfere with [a] finding only if it were demonstrated that the Lord Ordinary had, in his assessment and evaluation and in the context of the manner in which the proof had been conducted, plainly gone wrong.

[84] In approaching the task before this court I am acutely conscious of the constraints to which, on matters of fact, it is, as an appellate court, subject. These constraints are well-known and have recently been re-emphasised in a number of judgments of the House of Lords. But the existence of these constraints does not absolve this court from its obligation as a court of appeal on matters of fact to reconsider the evidence led before the Lord Ordinary and to determine upon such reconsideration whether critical findings of fact, both primary and secondary, made by the Lord Ordinary were justified. In undertaking that reconsideration it is always necessary for the appellate court to bear in mind the advantages, identified in the authorities, which a judge of first instance enjoys and which an appellate court does not. These include the opportunity to form, from the manner in which a witness gives his or her evidence before that judge, an impression as to the reliability or otherwise of the evidence given by the witness. That impression is likely also to be informed by the manner in which other witnesses, whether contradictory or confirmatory, give their evidence on the same or related matters. The personality of a witness may also have a bearing on the credibility or reliability of his or her testimony on particular matters; that cannot be assessed from the printed page. The way in which the case is conducted by legal representatives in the court of first instance (including the absence of challenge to the admission of particular evidence or to its truth or accuracy) may also legitimately affect the approach adopted by the court to the assessment of evidence. Moreover, in so far as concerns the evaluative exercise of drawing, or declining to draw, factual inferences from primary facts, an appellate court should exercise due caution before reversing such an evaluation.

[85] On the other hand, when, on examination by the appellate court of the printed evidence, it is plain that it could not constitute a proper basis for some primary finding of fact made by the judge of first instance, the appellate court has a power and a duty to reverse that finding. If findings of fact are unsupported by the evidence and are critical to the decision of the case, it may be incumbent on the appellate court to reverse the decision made at first instance…"

[36] Similar guidance was given by Lord Hope in Thomson v Kvaerner Govan Ltd 2004 SC (HL) 1 paragraphs [16]-[17] as follows:

"[16] The rule which defines the proper approach of an appellate court to a decision on fact by the court of first instance is so familiar that it would hardly be necessary to repeat it, were it not for the fact that it appears in this case to have been overlooked. In Clarke v Edinburgh and District Tramways Co (p37), Lord Shaw of Dunfermline said that the duty of the appellate court, not having the privileges, sometimes broad and sometimes subtle, of the judge who heard and tried the case, was to ask itself whether it was in a position to come to a clear conclusion that the judge who had these privileges was plainly wrong. The words 'plainly wrong' were picked up and repeated by Lord Macmillan in Thomas v Thomas, when he said (pp 59-60):

'So far as the case stands on paper it not infrequently happens that a decision either way may seem equally open. When this is so, and it may be said of the present case, then the decision of the trial judge, who has enjoyed the advantages not available to the appellate court, becomes of profound importance and ought not to be disturbed. This is not an abrogation of the powers of a court of appeal on questions in fact. The judgment of the trial judge on the facts may be demonstrated on the printed evidence to be affected by material inconsistencies and inaccuracies, or he may be shown to have failed to appreciate the weight or bearing of circumstances admitted or proved, or otherwise to have gone plainly wrong..

…If the case on the printed evidence leaves the facts in balance, as it may be fairly said to do, then the rule enunciated in this House applies and brings the balance down on the side of the trial judge.'

[17] As Lord Stott observed in his dissenting opinion in McLaren v Caldwell's Paper Mill Co Ltd (p 168), a Lord Ordinary's view on the credibility or reliability of a witness is not sacrosanct. But the jurisdiction of the appellate court must be exercised within narrow limits where the only issue is whether it should take a different view from that which the trial judge formed on the facts. Viscount Simon said in Thomas v Thomas (p 48), that Lord Greene MR had admirably stated the limitations to be observed in the course of his judgment in Yuill v Yuill. In that case Lord Greene MR said (p 19): 'It can, of course, only be in the rarest of occasions, and in circumstances where the appellate court is convinced by the plainest considerations, that it would be justified in finding that the trial judge had formed a wrong opinion.'"

[37] At the outset we acknowledge that the Lord Ordinary had the major advantage of seeing and hearing the witnesses, and that it was pre-eminently for him to assess credibility and reliability. As has been emphasised repeatedly in authorities such as Thomas v Thomas 1947 SC (HL) 45, Thomson v Kvaerner Govan Ltd 2004 SC (HL) 1, and Hamilton v Allied Domecq plc 2006 SC 221, the advantage of the judge at first instance can never be underestimated and is such that an appeal court should be very reluctant to interfere with findings of fact. Nevertheless, as Lord Hamilton noted in the latter case at paragraph [85]:

"… when, on examination by the appellate court of the printed evidence, it is plain that it could not constitute a proper basis for some primary finding of fact made by the judge of first instance, the appellate court has a power and a duty to reverse that finding. If findings of fact are unsupported by the evidence and are critical to the decision of the case, it may be incumbent on the appellate court to reverse the decision made at first instance …"

[38] In the present case the Lord Ordinary, in paragraph [32] of his opinion, very properly recognised the uncertainties and risks of assessing witnesses on the sole basis of their demeanour in the witness box. He impliedly acknowledged the usefulness of cross-checking their evidence against any objective, non-contentious surrounding facts and circumstances, and expressly recorded:

"I do not find any of the other evidence materially to undermine the specifics of the pursuer's account or his evidence more generally."

In our view, that observation demonstrates that the Lord Ordinary considered the surrounding facts and circumstances, and drew comfort therefrom for his preference for the pursuer's account over the defenders' account, and for the conclusion that he ultimately reached.

[39] As one of the contentions raised in this reclaiming motion is the criticism that the Lord Ordinary has gone plainly wrong in the course of his cross-checking exercise (see paragraphs [21] and [27] above), we must consider the evidence to assess whether any non-contentious evidence of surrounding facts and circumstances either supports the pursuer's account, or is merely neutral, or whether it materially undermines the pursuer's evidence. In so doing, we have the benefit of the Lord Ordinary's opinion, an appendix containing verbatim the evidence led at the proof before answer; a further appendix containing inter alia joint minutes; and two copy dispositions (relating to St Helens Gardens and Lochrig Court) which counsel provided in the course of the reclaiming motion at the request of the bench. We also wish to record that the circumstances of the second transaction, namely Lochrig Court, were the subject of a highly intensive scrutiny in the Inner House, partly because circumstances had changed since the Outer House in that the first defender, without any concession of wrongdoing on his part, indicated a willingness to dispone St Helens Gardens to the pursuer (see paragraph [25] above). In a sense, that concession simplified the appeal court's task.

[40] In our opinion, an examination of the evidence relating to non-contentious and objective facts surrounding the acquisition of Lochrig Court materially undermines the pursuer's account of having given the first defender a mandate or commission to purchase a house on his behalf to serve as his home. We consider that the Lord Ordinary has gone plainly wrong on this issue, and therefore that the matter of Lochrig Court is at large for this court. We have reached that view for the following reasons.

[41] We consider that the non-contentious evidence relating to the first transaction at St Helens Gardens materially supported the pursuer's account that he had given his son a mandate or commission to find a house in Glasgow for him and his wife to live in as their home on their return from the USA. As the pursuer had been absent from Scotland for 25 years, and as he was preoccupied with his ailing wife and with arrangements to leave the USA and to travel to Scotland, it was understandable that he should request his son to find a home for him in Glasgow. The pursuer and his wife duly arrived in Scotland on 18 November 2005. Once they had visited, inspected and approved St Helens Gardens as suitable to serve as their home, the pursuer arranged for the precise funds necessary to settle the purchase transaction (namely £192, 703.88) to be placed in the first defender's account on 8 December 2005. A few days later, on 14 December 2005, the price was paid, the disposition delivered, and the transaction completed. Two weeks later, on 1 January 2006, the pursuer and his wife moved into St Helens Gardens and lived there as their home.

[42] By contrast, the non-contentious evidence relating to the second transaction at Lochrig Court does not support the pursuer's account. By February 2007, the pursuer had been living in Scotland for over a year. He was well able to choose his own home, and to instruct a lawyer. It is less clear why, in these circumstances, he would delegate the choice and purchase of a new home to his son. Furthermore, the non-contentious evidence established that the pursuer did not view or inspect the newly-built four-bedroom Wimpey house at 6 Lochrig Court (fitted with integrated appliances and carpets). The pursuer said in evidence that he had seen only the show-house: Appendix page 57E-F. He confirmed that he had never been in the house at 6 Lochrig Court at any time, either before or after the purchase. As for the purchase itself, the sum required for settlement on 13 April 2007 was £290,768.89. But in contrast to the first transaction, the pursuer did not provide the precise funds by placing them in the first defender's account shortly before settlement. Rather it was some seven weeks earlier, on 19 February 2007, that he had handed the first defender a cheque for a round-figure sum of £285,000, thus providing the wrong amount, many weeks in advance of the ultimate settlement date (losing the use of the money, for example, to earn interest). In our view it is significant that, on the evidence available, it is not possible to reconcile the figure of £285,000 with the ultimate settlement figure of £290,768.89. Even bearing in mind all the prices advertised for the property, and even assuming that the pursuer managed to obtain a further discount of £10,000 as he stated in evidence, the figure of £285,000 is not reached. The pursuer's evidence in court that "the 285 was the full price of the house, plus all … any expenses" was contradicted by the lawyer's evidence that a total of £290,768.89 was required for settlement: Appendix page 577C. Similarly the pursuer's averment in Article 7 of Condescendence at page 26B-C of the Reclaiming Print, namely that:

"The loan funds [i.e. the mortgage obtained by the defenders] were not required to fund the purchase, the entire price having been contributed by the pursuer"

was not borne out by the evidence. It is also of significance that the pursuer gave two explanations as to why the cheque was for a figure of £285,000. At first he stated that £285,000 was what the builders wanted. Later however he said that it was his son who told him that the "end figure" of £285,000 (to include stamp duty, discounts, carpets, upgrades) was needed to buy the house.

[43] Those facts alone seem to us materially to undermine the pursuer's account. But there are yet further objective facts and circumstances which undermine it.

[44] First, once the house at Lochrig Court had been purchased, the pursuer made no attempt to move in and live there. On the contrary, he remained in St Helens Gardens. It was the defenders and their teenage son Richard who began to occupy Lochrig Court in about May 2007. On the evidence, the pursuer was fully aware that they had done so, and did nothing to try to prevent or challenge that development, or formally to regularise it by lease or licence or express permission for temporary occupancy. Although maintaining in evidence that Lochrig Court was purchased for him, there was no evidence that the pursuer ever treated Lochrig Court as his home. [45] Secondly, the defenders spent the £285,000 in a quite open and uninhibited manner. They used the major part of it for the purchase of Lochrig Court, and the balance for inter alia the purchase of two cars; the refurbishment of Burnhead Road with a view to selling it (£15,000); making 6 Lochrig Court ready for occupation (£8,000 including putting up blinds, light fittings and wallpaper, and providing furniture: Appendix pages 203E-F and 379D-E); and paying off credit card debts. Such behaviour was, in our view, wholly inconsistent with a surreptitious scheme whereby the first defender deliberately disobeyed his father's clear instructions to purchase a home for him and to take the title in his name.

[46] Thirdly, for the defenders and their son openly to occupy Lochrig Court is again inconsistent with such a scheme, as their occupancy of the new house could not but arouse suspicions and result in the scheme being discovered.

[47] Fourthly, but perhaps of less significance that the other facts referred to above, the figure of £285,000 bore a relationship to the nil rate tax level for inheritance tax at the time the cheque was given.

[48] In the result we are satisfied that the objective facts and circumstances surrounding the second transaction materially undermine the pursuer's account. We also consider that those facts and circumstances support the defenders' account. We are therefore persuaded that the test set out in Thomson v Kvaerner Govan Ltd and Hamilton v Allied Domecq plc has been met, and that the Lord Ordinary went plainly wrong when he concluded:

"I do not find any of the other evidence materially to undermine the specifics of the pursuer's account or his evidence more generally."

For our part, we have formed the view that there are weighty factors in favour of the defenders' account, which justify the disturbance of the Lord Ordinary's decision relating to the Lochrig Court purchase.

[49] What, then, did the evidence establish? In this context, we consider that questions are raised by the contentious (and to some extent unresolved) evidence relating to payments of £3,000 by the defenders to the pursuer following upon the receipt by the first defender of a cheque from the pursuer for £285,000. We note the following features: (a) if the evidence of the defenders and their son Richard were to be accepted, seven such payments were made during the seven months between February and August 2007, at which time the summons was served upon the defenders on their return from a holiday abroad; (b) many of the payments were described by the defenders and their son Richard as having been made in bank-notes which had been obtained either from the bank or from cash-line machines; (c) one result of these transactions was a substantial reduction in the value of the pursuer's identifiable capital, while creating a source of cash income for the pursuer which was not easily traceable.

[50] However the nature and purpose of the payments of £3,000, and their connection (if any) to the transfer of £285,000 to the first defender, was not fully resolved at the proof. This court cannot speculate. Accordingly the only options available to this court are two in number, namely that the cheque was handed over (a), for the purpose of the purchase of a home for the pursuer through the agency of his son; or (b) as an unconditional gift by the pursuer to his son. We have already set out the reasons why the surrounding objective facts and circumstances do not support, and in fact materially undermine, the pursuer's account, namely option (a), whereas those facts and circumstances provide support for the defenders' account, namely option (b). Accordingly we are satisfied that the evidence established on a balance of probabilities that the pursuer made an unconditional gift of £285,000 to the first defender. It is unnecessary for this court to identify the motive or motives underlying that gift.

[51] We shall accordingly allow the reclaiming motion so far as directed to the Lord Ordinary's conclusion in paragraph [32], namely:

"… I do not find any of the other evidence materially to undermine the specifics of the pursuer's account or his evidence more generally. I accordingly find that the defenders have failed to prove that the pursuer made a gift to them of the sum of £285,000. Rather, I find it more probable that the cheque in that sum was handed over by the pursuer to the first defender for, as the pursuer avers, the purpose of purchasing the house which became known as 6 Lochrig Court, Stewarton, with a view to the pursuer occupying that property."

[52] For completeness, we now give our views on the remaining grounds of appeal on the assumption that (contrary to our decision above) the Second Ground of Appeal had not been successful.

Ground of Appeal 3

[53] The approach adopted by the Lord Ordinary (namely the granting of a decree of specific implement against the first defender, with an indication that, in the event of non-compliance, there would be a decree for payment against both defenders jointly and severally) contains an implicit acceptance that the pursuer could not seek to have the second defender ordained to make over her one half share of the house at Lochrig Court to him. But if the first defender were to be unable to obtain the second defender's co-operation to enable him to comply with the first interlocutor, the second defender would be found liable, jointly and severally with the first defender, to make payment to the pursuer of the sum of £285,000. In our view therefore this Ground of Appeal is without merit.

Ground of Appeal 4

[54] As indicated in paragraph [52] above, we give the following views in relation to the Fourth Ground of Appeal on the assumption that the evidence did not establish an unconditional gift of £285,000 to the first defender, but rather, in the Lord Ordinary's words, that "the cheque in that sum was handed over by the pursuer to the first defender for, as the pursuer avers, the purpose of purchasing the house which became known as 6 Lochrig Court, Stewarton, with a view to the pursuer occupying the property." On that basis or hypothesis, when the first defender transferred about £200,000 of the £285,000 into a joint account in his and the second defender's names, the second defender became enriched to that extent, at the expense of the pursuer. The subsequent purchase of a house in the defenders' joint names, using that £200,000, together with the use by both defenders of the balance of the £285,000 to purchase cars, pay off credit card debts, and redecorate their existing home at Burnhead Road, also demonstrated that the second defender had been enriched. Continuing with the hypothesis, it is our view that the second defender failed to prove any consideration given for such enrichment. Her obligation relating to the mortgage over Lochrig Court was the result of a contract entered into at a subsequent date, secured upon the property, following upon the gratuitous receipt of the funds which had enabled her to purchase the property. In these circumstances, and on the above hypothesis, even if the second defender was wholly unaware of any purpose (other than as a gift to the first defender) underlying the delivery of the cheque – in other words, even if she was unaware of any alleged "agency and property purchase" instructions accompanying the cheque – we consider that the Lord Ordinary would have been entitled to conclude that the evidence established an unjustified enrichment on the part of the second defender as defined by Lord President Rodger of Earlsferry at page 727C-D in Shilliday v Smith 1998 SC 725 in the following passage:

" … a person may be said to be unjustly enriched at another's expense when he obtained a benefit from the other's actings or expenditure without there being a legal ground which would justify him in retaining that benefit. The significance of one person being unjustly enriched at the expense of another is that in general terms it constitutes an event which triggers a right in that other person to have the enrichment reversed …"

[55] Similarly Lord Hope of Craighead observed at pages 94E-F and 99E of Dollar Land (Cumbernauld) Ltd v CIN Properties Ltd 1998 SC (HL) 90:

"An obligation in unjustified enrichment is owed where the enrichment cannot be justified on some legal basis arising from the circumstances in which the defender was enriched … the pursuers must show that the defenders have been enriched at their expense, that there is no legal justification for the enrichment, and that it would be equitable to compel the defenders to redress the enrichment."

On the assumption therefore that the evidence did not establish an unconditional gift to the first defender, the pursuer would have succeeded in demonstrating that the second defender had been enriched at his expense, that there was no legal justification for the enrichment, and that it would be equitable to compel her to redress the enrichment. As for Varney (Scotland) Ltd v Lanark Town Council 1974 SC 245, there it was held that a pursuer who has, say, a statutory or contractual remedy against a defender, must use that remedy rather than resorting to an equitable remedy such as restitution or recompense based on unjustified enrichment. But in the present case, so far as the second defender is concerned, the pursuer would have had no remedy against her other than an equitable one. We are not therefore persuaded that the ratio in Varney (Scotland) Ltd would have prevented the pursuer from enforcing that equitable remedy against the second defender.

[56] In our opinion therefore there is no merit in the fourth Ground of Appeal.

Ground of Appeal 5

[57] For all the reasons advanced by counsel for the pursuer and noted in paragraph [33] above, we do not accept that the Lord Ordinary erred in the exercise of his discretion when he refused to allow the first defender to amend the pleadings on the fifth day of the proof before answer.

Decision

[58] For the reasons given above, we intend to allow the reclaiming motion and to recall the Lord Ordinary's interlocutor so far as relating to Lochrig Court. However in the first instance we shall continue the reclaiming motion to a By Order hearing to take place at least 28 days after the issuing of this opinion. The precise terms of the interlocutor will depend upon the information (and if necessary vouching) offered in respect of any transfer of the title of the property at St Helens Gardens into the pursuer's name. At that hearing, it may also be convenient to address the question of expenses.